This is a blog by a former CEO of a large Boston hospital to share thoughts about negotiation theory and practice, leadership training and mentoring, and teaching.
Is there something they teach in hotel school that suggests that having unusual water in conference rooms is good for business?
In a previous post, I noted the silliness of importing bottled water from 8000 miles away to serve in conference rooms. Today I saw water served in lovely carafes, with blueberries at the bottom.
Blueberries?
Well, perhaps someone thinks that because they are the number one fruit when it comes to antioxidants, putting them in the bottom of a bottle will persuade people to have conferences in their hotel. But I think that's stretching things a bit.
In our group, the first question was, "Do you think they washed them?" The second question was, "Do you think they are real?" Then, "Can you taste them at all?" Answer: No.
To follow up on yesterday's post about the CC6 Lean team, I had a few minutes today to drop by just as the group was getting engaged in fishbone diagrams. These are used to brainstorm in more detail the nature of major problems, looking at their components and then asking the "five why's" to conduct a root cause analysis.
As I walked into the room during a break, a couple of people mentioned to me that the morning session had been a lot tougher, emotionally, than yesterday's current state analysis. This is a common stage in the Lean process. It is relatively easy to map out the current state. When you start talking about why it exists, it is hard not to blame someone else in the room or someone who is not in the room. "If [name] only did this differently, we could solve the problem," is the common refrain I have seen in other rapid improvement events.
But, the idea of Lean is to focus on the problem and not the person. This is not about blame. It is about a workplace environment that has evolved over the years -- full of work-arounds and inefficiency and waste. By the time I left, the group was again smiling a bit more and collaborating on how to analyze the situation. Later, they will invent countermeasures to help undo the waste, setting goals and targets and timelines for the next steps.
Here is a short video about fishbones to give you a sense of the concept and how it progresses. Jenine Davignon from our business transformation group is leading the class. If you can't view the video, click here.
The roll-out of Lean at BIDMC continues throughout the hospital. A current project is to redesign the work flow on "CC6," one of our busiest medical/surgical floors. Although the staff has been working on this for several months, it can be difficult to find time during the workday to make improvements when nurses, patient care technicians, and others have full patient assignments. So, this week, we have taken two days aside for an improvement event, during which the staff will have dedicated time to look at their processes and experiment with improvements.
I dropped by for a short time today to watch people outline the "current state" of their work flow. A person in each job category prepared a step-by-step itemization of their daily routine. I offer a videotape of sections of this below. In order, you will see Stacey Adamson, physical therapist; Dawn Castro, resource nurse; Mike Crowley, unit assistant; and Laurie Phillips, case manager. You will also briefly see Jenine Davignon, a management engineer from our Business Transformation office, and Allison Wang, a college co-op student in that office. And finally Oscar Juarez and Sandra Espinosa, being reminded to post lunch breaks as part of a busy day in the work flow of a patient care technician.
I was impressed by the complexity of each person's job. I also began to see, as they presented their daily work, opportunities for reducing waste and improving the work environment and patient care. The team will undoubtedly find many more of those opportunities during this two-day session. If I can drop by tomorrow, I will report back to you.
Our hospital neighbors to the north in New Hampshire have just taken a decisive step that presents a healthy challenge to the so-called "medical Mecca" in Massachusetts. Steve Ahnen at the New Hampshire Hospital Association writes to say:
Yesterday, we launched our initiative to eliminate harm in New Hampshire's hospitals by the year 2015. While we are proposing to eliminate all harm, our efforts will be clearly focused on those instances of harm that could be prevented if all of the evidence based practices had been followed that are known to prevent that harm.
This is such a terrific effort. It is putting a stake in the ground for our hospitals and they are excited and ready to move forward. We have lots to learn and hope to share that learning as we go.
You can find a copy of the press release here. Excerpts:
CONCORD – In a new effort to promote better and safer care to patients, the New Hampshire Hospital Association and Foundation for Healthy Communities have announced that hospitals across the state will strive to eliminate harm to patients by 2015. To accomplish this goal, hospitals will work together to consistently follow the processes of care that have been proven to increase patient safety.
“Hospitals in our state have made great strides in making improvements to quality of care,” said Steve Ahnen, president of the New Hampshire Hospital Association. “With this initiative, we’ll continue that work with an even more ambitious purpose and timeline.”
While there are no uniformly accepted definitions, “harm” in the Eliminate Harm Initiative refers to an injury associated with medical care that requires or prolongs hospitalization and/or results in permanent disability or death.
. . . Greg Walker, chairman of the Foundation for Healthy Communities and CEO of Wentworth-Douglass Hospital in Dover, said, “The boards of trustees of both the New Hampshire Hospital Association and Foundation for Healthy Communities unanimously passed a resolution to make this happen, and the CEOs of all 26 acute care hospitals are ready.”
A statewide steering committee will spearhead the N.H. Eliminate Harm Initiative and identify which aspects of harm hospitals will be targeted for elimination. Several hospitals are represented on that committee. Hospitals in New Hampshire already have been working for several years on improving patient care, including efforts to decrease infection rates through a campaign to promote hand washing among health care providers. Hospitals also are decreasing harm in the operating room by using a patient safety checklist before and during all procedures. Hospitals receive guidelines and tools that are used statewide to help them measure their progress.
“Our hospitals are poised to deliver the best health care in the country,” said Bruce King, immediate past chair of the NHHA board of trustees and CEO of New London Hospital. “The residents of New Hampshire are counting on us.”
As I was waiting to teach the second half of a Boston University MBA class (HM710, here) last night, I heard a student near the end of the first half saying that doctors would never focus on quality and efficiency improvements until the fee-for-service payment system ended and was replaced with a global, or capitated, payment system.
This, of course, is not so. You can look at our record and that of many hospitals to see dramatic improvements in quality and enhancements in efficiency under a fee-for-service payment system.
Our experience is that finances and methods of payments are not highly motivational to health care providers in the hospital setting. Instead, people are motivated by a genuine desire to improve the quality and safety of health care delivery. The problem is often a lack of knowledge of process improvement, requiring some training and encouragement from clinical leaders. Fortunately, once learned, there is a virtuous cycle between those activities and efficiency and cost-effectiveness.
So, while capitation may have important attributes, let's be careful not to underestimate the good intentions and ability of doctors and nurses to achieve worthwhile things under other payment regimes.
The acquisition of the Caritas Christi hospital system by the Cerberus private equity company continues to generate press here in Boston, and well it should given the size and importance of the transaction. Indeed the Boston Globe has a special section on this, which is updated as it publishes stories and editorials.
As I have noted before, the purchase has a lot to recommend it (including stability of pension funds, investment in under-capitalized hospitals, and tax revenues to municipalities and the state), but it also raises challenging public policy issues that the Attorney General, DPH, and the Court have to address. I have been trying here to outline some of those based on what I have learned about this issue.
Many of my colleagues in the non-profit hospital world have expressed confusion about how such a transaction is possible in a world of decreasing reimbursements, where even non-profits have trouble achieving a positive bottom line. I provided a general perspective here, and in a post below, I talk about how the use of a non-cash expense, depreciation, can provide a financial return to investors.
After I wrote that post, a colleague in the finance world wrote to say that there is another aspect of depreciation that I had neglected to mention that produces additional cash flow to the private equity firm. This is a financial tool that provides no benefit to tax-exempt hospitals, and so I again present it for the benefit of my non-profit colleagues and other interested readers. (Not being an accountant, I cannot claim expertise on all these matters: I trust CPAs reading this will correct any errors I make.)
Under the US tax code, firms can use accelerated depreciation for tax purposes. What does this mean and why is it helpful? Why does it give the private equity firm an additional incentive to dispose of property more quickly?
Let's say that you have acquired $10,000 dollars of furniture, which you plan to depreciate over its useful life. If that useful life is 10 years, you would take an accounting expense for 1/10 of the furniture's cost each year, or $1,000. (This assumes no salvage value at the end of the useful life.)
Under accelerated depreciation, for tax purposes, you get to write off more of the asset's value in the early years. In year one, for example, you could claim an expense of $1429.
Now, you obviously can't do this on your taxes for the entire useful life, as you would end up expensing more than the value of the asset. Indeed, in the later years, the tax depreciation expense has to slow down (see chart).
So what does this mean? This goes back to the request of some competing hospitals to the AG that would require Cerberus to hold on to the Caritas Christi assets for seven years, as opposed to the three years to which Cerberus has committed. If the firm has to hold on to its assets for a longer period, it starts to lose the advantages of accelerated depreciation. It is to its financial advantage to dispose of assets more quickly. That seems to be a simple (and perfectly legal) result of the US tax system.
By the way, the next firm to purchase the assets gets to do the same, all over again -- using the new purchase price as the basis for the original cost of the assets.
On that point, maybe someone out there can advise on one last item: What cost basis can Cerberus use for the assets it seeks to depreciate? I do not believe that the firm is actually making a cash payment to someone to acquire the hospitals. After all, the Archdiocese is not an "owner" in the financial sense, like a shareholder would be, since this is a non-profit corporation. It cannot receive funds from a purchase that could then be used for other functions of the Church. As best I understand, Cerberus is making cash commitments -- e.g., for pensions and capital investment -- to the hospital system in return for ownership, but I think that is different from making an asset purchase.
So once Cerberus owns the Caritas hospitals and their associated medical equipment, computer systems, furniture and other capital assets, are the assets valued at their original cost, or can the private equity firm re-value them at replacement cost? Clearly, that will make a difference in the potential to generate cash flow through depreciation. If you know the answer, please provide a comment.
I'm just back from the Hub on Wheels, where BIDMC staff volunteered their time to provide emergency medical services to the thousands of riders traversing Boston on a beautiful fall day.
A light story today, in the social media arena. If you are on Facebook, you either love or hate FarmVille. I mainly find it annoying when friends tell me they have bought a virtual bushel of virtual soybeans or some such thing. And truly, I just don't get the whole point. But over 18 million people play it every day.
There are 62 million active users -- roughly the population of the United Kingdom (which, by the way, has a total real -- not virtual -- farming workforce of about half a million).
Anyway, Shane Snow has published this post comparing Farmville with Real Farms. We learn, for example, that the average Farmville player is a 43-year-old woman and the average farmer is a 57-year-old man. And so on. It is strangely interesting.
As many Bostonians prepare to ride in the Hub on Wheels this weekend, my friend Honora sends a picture of the perfect mid-ride snack from Cycle Oregon 2010. Just what you need for the second 35-mile leg!
The proposed acquisition of the Caritas Christi system by the Cerberus private equity firm continues to be in the local news. Today's lede:
Caritas Christi Health Care executives have told union negotiators they will shutter St. Elizabeth’s Medical Center in Brighton and Carney Hospital in Dorchester if they can’t close a deal for the six-hospital chain to be bought by a New York private equity firm.
And further down in the story:
Caritas representatives asked for concessions from the nurses union, including a wage freeze, but no agreement was reached, the two said. The executives also urged more nurses to take an early retirement program introduced last spring. Compare this to what was reported in this story just one year ago:
With economic pressures on Massachusetts hospitals starting to ease, the strongest recovery may be taking place at an organization that was one of the weakest financially: Caritas Christi Health Care.
By aggressively cutting costs and boosting revenue from medical care, the Boston-based Catholic hospital chain is on track to post operating income of $31.1 million for the fiscal year ending Sept. 30, compared to a $20.4 million loss last year.
The anticipated swing of more than $50 million has been achieved through a series of moves, Caritas officials said. The chain consolidated operations at its six Eastern Massachusetts hospitals, cut jobs and froze salaries, negotiated higher reimbursement rates from insurers, and recruited more specialists to perform more complex - and profitable - procedures. A new urology group, for instance, has performed hundreds of prostate operations this year.
....Unlike some other hospitals, which have resisted union organizing efforts, Caritas signed an agreement with the Service Employees International Union to permit “free and fair’’ elections. Groups of employees at St. Elizabeth’s and Caritas Carney subsequently voted to join the union. Although the labor contracts are likely to boost expenses, de la Torre said he is sympathetic to workers who live in the same communities Caritas hospitals serve.
Higher labor costs as a result of unionizing will be offset by more than $30 million in annual cost savings, said chief financial officer Mark Rich, including by having groups of specialists treat patients at more than one hospital, and by merging physicians’ administrative functions. “There’s no one silver bullet,’’ Rich said.
At tonight's Annual Meeting, the BIDMC Board of Directors presented the ninth annual Robert M. Melzer Leadership Awards to three individuals who have been instrumental in “leading constructive, lasting and all-embracing change” at our medical center.
The Leadership Awards – named in recognition of Bob Melzer’s contributions here as former Chair of the Board and interim CEO in 2001 – are an opportunity for the board to celebrate a select few among our physicians, nurses, staff and lay volunteers. This year’s awardees are Elena Canacari, Joanne Pokaski and Paula Ivey Henry. These are the scripts of the presentations for each award.
At the end is a short video clip of the first two recipients' remarks. (I couldn't get the third because I was on stage.)
Elena Canacari, RN, CNOR, Director of Perioperative Services Presented by Marsha Maurer, Senior Vice President, Patient Care Services, and Chief Nursing Officer
I could not be more pleased to be here announcing Elena Canacari, Director for Perioperative Services, as a winner of this year’s Melzer Leadership award. For those of you who don’t know Elena, let me describe the scope and importance of her work at BIDMC.
Elena has a long history at both the Beth Israel and Deaconess hospitals, and has been Director of Perioperative Services at BIDMC for the past seven years. Her scope of responsibility spans two campuses and includes 38 ORs, three post-anesthesia care units, preadmission testing, OR scheduling, central processing, and a business unit with a total of more than 500 FTEs. These are areas which see high volume, pose high risk, and include some of our most expensive capital facilities and equipment, and priority services.
Two years ago, our organization experienced a wrong site surgery. You are all aware of this event – it presented a great challenge for the organization. Elena was an ever steady guiding force after that event, ensuring that staff involved in the event were supported, and that not only the OR, but the entire organization learned from this event. She led substantial changes to what is now called our “Universal Protocol.” This included developing a standard “scripted” timeout, and implementing this new standard throughout Perioperative Services. Part of that work was making sure the entire team is engaged and pauses for a “moment of reverence” before the incision. The “Universal Protocol” has since been rolled out to every procedural area in the medical center.
Elena has also been the leader of ongoing weekly “safety huddles” among perioperative leaders, and coordinator of quarterly interdisciplinary safety grand rounds, routinely attended by as many as 400 perioperative services staff.
Elena’s colleagues are so impressed with her that they nominated her for, and she won, the OR Manager of the Year Award, 2009, from OR Manager Magazine. Here is what her colleagues said about her.
Dr. Mark Callery, Chief of General Surgery, described a leader who has “an innate sense of professionalism, team leadership, even-handedness, and equity at all times.”
Dr. Malcolm M. DeCamp, former Chief of Cardiothoracic Surgery wrote: “I simply could not do my job without Elena’s advice, tutelage, expertise, wisdom, skill, sweat equity, and business savvy.” He describes Canacari as” the ‘glue’ that holds the entire surgical enterprise together.”
Nurse managers of the east and west ORs and perianesthesia areas agree that “Elena’s every word and action is grounded in integrity and trust. She offers strength and support during change with a clear focus and direction.”
In addition to her leadership in patient safety, Elena is also a seasoned and accomplished operations leader. She has inspired her team to produce record improvements in OR supply management, room turnover times, scheduling and OR utilization efficiencies, and employee safety and satisfaction.
Elena’s contributions at BIDMC are not the end of the story. She is a National Patient Safety Foundation Fellow – partnering with people across the country around safest practices. She is also an active member and leader in AORN affording our organization important opportunities to participate in national forums and leading change at the national level.
Yes, Elena is an outstanding leader and very deserving of this award. To sum it all up I need to tell a little story about this event. As it happens, this evening falls in the middle of what I knew to be Elena’s annual vacation, so it took a bit of scheming to get her here. In the course of this I was talking to her husband, Don. I could tell he was fretting a bit about pulling this off. He said to me, “Marsha, Elena is like steel.” I knew exactly what he meant. She has the strength, the durability, the solidity, the integrity, and the foundational importance of steel – and she has brought all of that to her role as a leader in perioperative services.
Joanne Pokaski, Director of Workforce Development Presented by Lisa Zankman, Senior Vice President, Human Resources
Joanne has been at BID almost six years. In that time, she has developed quite a few programs that have had a profound effect on our workforce.
This started with the recognition that BIDMC had a need to fill positions for which there was a skill shortage in the workplace while many of our employees wanted to advance their careers, but were blocked by the lack of credentials and the inability to go to school while working full time. This seemed like an opportunity for a win/win for the medical center and its employees.
In the beginning, Joanne started nursing and surgical tech programs by collaborating with a community college to bring academic courses on site at BIDMC. BIDMC selected applicants from current employees and provided loans to pay for the classes and clinical practicums on site. If graduates worked for two years as a nurse or surg tech, the loans were "forgiven".
This model worked so well that other pipeline programs were created for medical lab technicians (a grant Joanne wrote for the Massachusetts Workforce Competitiveness Trust Fund was awarded for $500,000), research administrators (now over 2/3 of current research administrators are graduates of this program) and patient care techs (the second class of 10 students is now completing their training).
In addition, the Boston Foundation granted BIDMC $500,000 to create an Employee Career Initiative which brings community college classes on site to prepare employees for college level work. In addition, there are academic and career counseling services for all employees.
In the past year, the Workforce Development Team has also added GED, ESOL and US citizenship classes.
These efforts have touched over 700 BIDMC employees and they have been done with a staff of only three people in addition to Joanne. This year, BIDMC was given the Gould Award from Associated Industries of Massachusetts -- a prestigious award only given to one company per year for their efforts in employee education and workforce development. This external recognition validates the achievements that have been made for BIDMC. Joanne's accomplishments will make an impact on BIDMC for years to come.
Paula Ivey Henry, PhD, Vice Chair of the Board of Trustees and Chair of the Patient Care Assessment and Quality Committee Presented by Paul Levy, President and CEO
One word consistently crops up when the subject is Paula Ivey Henry and that word is enthusiasm. Since joining the ranks of BIDMC’s volunteer leadership five years ago, Paula has greeted every task and assignment we’ve put to her with such characteristic fervor that anyone would be hard-pressed to resist the urge to help. It’s this infectious brand of enthusiasm that makes her such a motivating leader, as Vice Chair of the Board of Trustees and most especially as the Chair of the Patient Care Assessment and Quality Committee, one of whose goals, ironically, is to ensure that enthusiasm is the only thing we spread at the medical center.
The Patient Care Assessment and Quality Committee, or PCAC as it’s known in BIDMC circles, was designed to support the medical center’s aspirations for clinical quality and safety and is one of the hardest working lay leadership committees, with its members meeting monthly and often dealing with technically complex and emotionally fraught issues. Paula has embraced both PCAC’s mission and her role as its chair with fierce conviction, devoting hours well beyond the confines of scheduled meetings to stay abreast and informed about some of the most important topics on the Board’s agenda. Aside from the overriding “enthusiastic,” her colleagues call her “thoughtful,” “dedicated,” and “open” with “a burning desire to make ours a better institution.”
Because she has successfully encouraged – not with hard-sell persuasion but with passionate inspiration – her fellow lay leaders to participate in creative thinking and analysis, which has helped our clinical and administrative staff to achieve measurable results in the quality and safety arena – and because we know her work to meet our goal of eliminating preventable harm to patients has only just begun, we are so proud to present Paula Ivey Henry with the Melzer Leadership Award for Leading Constructive, Lasting, and All-Embracing Change.
Here's the video. If you can't see the video, click here.
Luz, in our accounts payable department, was alert when this invoice came through and sent me the following note:
Hi Mr. Levy, Good morning. I have attached a copy of an invoice from Azkit Publishing, that has no po. But it has your name listed. Please review and approve.
Of course, it is a scam. I print it here in case others receive a similar document from this company.
I wrote below about the difficult policy issues faced by the Attorney general in the review of the proposed acquisition of the Caritas Christi hospital system by the Cerberus private equity firm, giving a more detailed example of one such issue here. In today's Boston Globe, Rob Weisman writes of a letter sent by several labor leaders to the Attorney General, refuting the points raised by several competing hospitals that wish to impose restrictions on the transaction. You can read the letter here.
Are the points raised by the other hospitals "simply [to] slow down any merger as a way to preserve their market share and to disadvantage Caritas," as asserted by the union leaders? Or, do the hospitals' arguments raise legitimate public interest concerns?
It is great to see the matter debated openly and completely, and the Globe provides an important public service when it posts the letter itself in addition to writing a summary story. Given the unprecedented scale of this proposed ownership shift, we are sure to see lots more give and take over the coming months.
At my annual physical exam last week, my primary care doctor employed a widely used web-based calculator to plug in cholesterol levels and other risk factors to estimate my likelihood of having a heart attack during the next ten years. I thought this was a neat idea until it produced an answer of 8%.
Wait, you mean I have a one in twelve risk of a heart attack over the next decade? That sounded really high. She calmly and thoughtfully explained that the main value of the algorithm was to help make a judgment about prescribing statins or other interventions that could lower risk. She also noted that anything under 10% at my age was a very good number.
So, I was going to write this post to tell this story and to make the point that these kinds of estimates can be shocking for the uninformed unless we have a context within which to interpret them.
I was also going to assert that the estimates give an impression of precision that may not be valid. What is the standard deviation around the estimate? How often is the actual estimate found to be true?
And, then, like a deus ex machina, the New York Times published this story about the very heart risk calculator that we had been using. The pertinent excerpt:
A new study finds that a widely used version of the ubiquitous heart attack risk calculator is flawed, misclassifying 15 percent of patients who would use it — almost six million Americans, of whom almost four million are inappropriately shifted into higher-risk groups that are more likely to be treated with medication.
Wow. So I revert to my doctor's excellent advice about diet, exercise, and other life style factors as the main things on which to focus over the next ten years.
With regard to the Cerberus private equity firm's acquisition of the Caritas Christi hospital system, I have been thinking about the request of a number of hospitals to the Attorney General that Cerberus should "commit to not selling Caritas for seven years instead of three"(see below.)
I came across a recent private placement memorandum (company not disclosed.) Here is what it says about this topic. I am not sure if this is the philosophy that guides the Caritas acquisition, but it is illustrative of the way in which private equity firms view the world:
The decision to exit an investment is based on a variety of factors, including the company's progress in achieving its potential, the General partner's view of an industry's competitive dynamics, the appearance of a willing buyer and the general state of the capital markets. The General Partner seeks to exit from a portfolio investment when it believes that the portfolio company has maximized or achieved a satisfactory level of operational improvement. Operational improvements may increase cash flow and allow the Partnership to realize a profit regardless of market conditions.
I read this as saying that imposing a seven-year requirement on sale of the hospital system or parts of it is likely to be a non-starter. Investors in a private equity firm expect that it will have flexibility to sell assets when it wants. While Cerberus has said it would not sell the Caritas assets for at least three years, that would be a minimum period needed to achieve operational improvements. Once you get past that length of time, you are more likely to have a going concern and you need to focus on the right moment to flip the investment to recover your capital and your profit.
I believe the concern expressed by the other hospitals is based on a fear that, if the retention time is short, the private equity group will under-invest in the Caritas hospitals and take the cash flow that emanates from the business to purchase physician practices and otherwise use the money to build market share. That larger market share would enhance the value of the overall business when the time comes to sell it to another buyer or to carry out an IPO.
I am not privy to financial projections or could say that this is the plan for Cerberus, but how could someone do it? It all rides on the existence of a major non-cash expense -- depreciation. If you take a hospital like BIDMC, with revenues of a billion dollars or so, a satisfactory operating margin might be $40 million, or about 4%. But our deprecation expense is, say, $65 million, so earnings before depreciation would be $105 million, or close to 11%.
If you chose not to use that depreciation for the usual purpose of renewal and replacement of capital plant and equipment, then it would be available for other purposes, like those that worry the competing hospitals. You would only do that if you did not plan to hold on to the assets for a long time. If you were planning to be a long-term operator, you would try to invest an amount at least equal to depreciation because you would have a concern for the long-term viability of your hospital.
So, I think these other hospitals are proposing a longer retention provision for the Caritas assets as a way of indirectly dealing with this possibility.
Since a requirement for a longer asset retention period is unlikely, another way of dealing with this concern is to get an enforceable commitment from the buyer that it would invest an amount at least equal to depreciation for the length of the retention period. In that way, it would not be as possible to "milk" the asset base for competitive purposes.
If Cerberus already intends to invest in the hospitals in this manner, such a provision should provide little or no impediment to the deal going through. If the company does not commit, then the regulators need to do a full analysis to see if there is cause for concern about renewal and replacement of capital facilities and equipment in these hospitals, especially if the plan is to use depreciation proceeds for acquisition of market share.
It isn't often that you get to see an insurance company-hospital negotiation in progress, but here is a descriptive story from SouthCoastToday.com. The key quotes:
After seven months of talks, Southcoast Health System, the region's largest employer, and Blue Cross Blue Shield of Massachusetts, the state's largest private health insurance company, are deadlocked in negotiations over reimbursement rates for care rendered to Blue Cross policy holders at Southcoast facilities.
. . . Keith Hovan, president and CEO of Southcoast Hospitals Group . . . said Friday "We're tens of millions of dollars apart."
"It would be irresponsible for us to accept what's being offered," Hovan said.
. . . McQuaide said Blue Cross is trying to operate under state government-mandated insurance rate caps.
This is what happens when state regulatory authority is applied in an arbitrary fashion. (See previous posts on this matter, starting here and working backwards.) The effect of the state's action is to increase the disparity between the rates of the highest paid providers and those whose contracts happen to come up for renewal. Check this chart to see which hospital is being paid more in the Southcoast service area. Hint, it is not Southcoast's. (Those are the hospital rates: I am confident you would see a similar pattern on the physician side, too, were you to compare the rates paid to the Eastern MA dominant provider group.)
Questions: Why should Southcoast have to justify getting rates at parity with competing hospitals and physician groups? If the negotiations take over seven months, is the system broken even more than we thought?
What better way to celebrate the breaking of the Yom Kippur fast than to view these images of samples from our daughter's pastry school graduation project (Tante Marie's Cooking School).
The theme was Herb Garden, and the items included:
Sage and brown butter cakes with walnuts and fried sage leaves;
Lemon thyme madeleines;
Strawberry puff pastry tart with mascarpone filling, basil leaves and balsamic syrup; apple tart with a rosemary crust (top picture) and mint chocolate truffles (bottom picture).
I sense that a cookbook may be in the offing, but in the meantime, please send samples!
Wishing an easy fast to my friends and colleagues on Yom Kippur. My favorite description of the holiday: "Making the comfortable uncomfortable, and the uncomfortable comfortable."
Bostonians are torn by Derek Jeter's recent acting moment at home plate -- when he pretended to be hit by a pitch when the ball actually hit the bat. (See video below.) Of course, Red Sox Nation wants to hate the Yankees. The Nation wants to hate Jeter, too, as the embodiment of their arch-rivals, but there has always been a grudging admiration for this spectacular athlete. When he pulled off this feat, my unscientific survey suggests that more people than not in this town found real pleasure in how well he did it.
Bob Ryan at the Boston Globe offers his thoughts on the "morality" of this kind of move, in general and by Jeter.
But let's be clear. If it had happened in a game against the Red Sox, Derek would have been hung in effigy throughout the city. Just ask Alex Rodriguez after the 2004 ALCS game at Yankee Stadium. Even though ARod got caught.
Comments submitted to the Massachusetts Attorney General by several community hospitals give a hint of the difficult task faced by that office as it considers the take-over of the Caritas Christi System by the Cerberus private equity company. Rob Weisman reports this morning in the Boston Globe that:
Lawrence General Hospital, Signature Healthcare Brockton Hospital, and Southcoast Hospitals Group in New Bedford, said . . . restrictions [on Cerberus] are needed to keep them viable and ensure that low-income patients have access to health care services at reasonable prices.
Recall that Cerberus is promising to invest capital in the undercapitalized Caritas hospitals; make whole an underfunded pension plan; pay property taxes to the communities in which it operates; and pay state taxes. These are powerful inducements to garner Archdiocese, local, legislative, and union support for the proposed acquisition.
Meanwhile, reports Weisman,
Among the conditions being sought by the Healthcare Access Coalition are measures to prohibit . . . Cerberus . . . from using “improper’’ incentives to recruit doctors from rival hospitals, a three-year ban on price increases for hospital services, and restrictions on “limited network’’ insurance contracts that exclude other providers. The community hospitals also want Cerberus to commit to not selling Caritas for seven years instead of three.
As the AG carries out her obligations under state law, the concerns of these hospitals -- which face direct competition from the Cerberus hospitals in their community -- certainly have to be considered. But how?
(By the way, Health Care for All, a public advocacy group, has offered its own set of proposed conditions.)
As I have discussed before, the financial model common for a private equity firm is to flip such acquisitions within a few years to permit the equity investors to recover their investment and make a profit. In preparation for that day, the firm will do what it can to burnish the value of the assets, as perceived by the financial marketplace. If the AG proposes and the state Court puts overly binding restrictions on the transaction and the actions of the private equity firm, they will make the deal financially infeasible. If the conditions of acquisition and operation are insufficiently powerful to protect the legitimate public interests of the rival community hospitals and others in the served communities, the regulators can inadvertently permit an excessive transfer of wealth to private investors from around the world.
This is the needle that the Attorney General must thread.
Neel Shah is a resident at Brigham and Women's Hospital who directs a nonprofit called Costs of Care that has launched a national essay contest on health care costs. He has lined up some great judges, including Atul Gawande and Michael Dukakis. He is offering $1000 prizes for the best anecdotes illustrating the importance of cost awareness in medicine. One prize is specifically reserved for a non-clinician (i.e., a patient or administrator). Here's a nice story about this on NPR.
Neel wrote to me, saying, "My current challenge is still in getting the word out to the non-clinician community. Would you be willing to help in this regard with a blog post?"
Done, Neel. Whether clinician or not, you can find more information here.
I have commented from time to time on the value of permitting staff access to social media and on the futility of limiting it. Dilbert has some thoughts on the matter, too.
Sally Sampson is a creative and prolific food writer with a particular interest in promoting healthy eating among children. One of her recent projects is Chop Chop, "a non-profit kids’ cooking magazine I’ve just launched with a few friends with the mission of encouraging nutritional literacy."
Here is a recent blog post by Sally entitled, "Theo Hates, no, wait, Theo Loves Tofu" on the Mark Bittman website. I am sure you will find it engaging and will enjoy its message.
Boston Medical Center issued this statement yesterday:
Boston Medical Center announced today that it has made a reduction in force of 119 people, including 44 nurses and 30 management staff. Another 40 employees will see their hours reduced. The hospital has a total work force of almost 6,000 people, more than 1,500 of whom are nurses.
“The hospital is projected to lose $175 million this year due to dramatic changes in Medicaid reimbursements,” said Tom Traylor, BMC’s vice president of federal, state and local programs. “We have been talking to the staff about this new reality for well over a year, and have been working to assess and increase efficiency in every corner of the hospital. We have been consulting with outside experts to study the efficiency of delivery of patient care, and they found very little excess capacity particularly in terms of hospital staffing levels. This layoff is one necessary element of addressing the hospital’s financial situation.”
This situation is a shame. When BMC was created and throughout its history, there has been a recognition of its special role, the largest "safety net" hospital in the region. It received promises during the debate on the state's universal access legislation that this role would be supported and preserved. When the state reneges on Medicaid reimbursements, all hospitals are hurt, but this one especially so.
If you do the math, a reduction in force of 119 people does not make up $175 million, so the hospital is surely making other difficult choices. They are lucky to have Kate Walsh, an excellent administrator, as CEO. But there are limits as to what any one person can accomplish when a major payer walks away from its obligations.
No, that's not the score of the arch-rivals' soccer game. It is a reflection of the vision of Dr. Jim Yong Kim, President of Dartmouth, as embodied in the creation of a new degree program focused on process improvement in the heath care delivery system. An excerpt from Karen Weintraub's story:
The 18-month master’s program is intended mainly for mid-career professionals — generally hospital and clinic administrators, health care consultants, medical educators, or managers from health-related industries.
Kim . . . said he hopes Dartmouth’s effort will spark a new profession of health care delivery experts whose aim will be to make medical care simultaneously less costly and more effective.
“In five years,’’ he said, “there have to be 15, 20 of these [programs] around the country, working together.’’
“We need to populate hospitals with people who think this way,’’ he continued. “Unless we do that, [health care] is going to break the bank.’’
Jim is the kind of academic visionary the country needs. That Boston needs, too.
As I approach blog post number 2000, it is time for reflection. For those who remember the 1992 Presidential campaign, this is a bit like Admiral James Stockdale's comment, "Who am I? Why am I here?" (But, I hope with a more successful result!)
I'm going to skip the first question and go right to the second.
I joined BIDMC in 2002 to carry out a public service, to save a great academic medical center that had fallen on hard times. That done, we proceeded to develop strategic plans for our clinical, research, and educational missions. Those have been successfully implemented, with growth in market share and clinical affiliations, expansion of a world-class research program, and enhancement of both undergraduate medical education and residency programs.
The next phase was an intense focus on quality and safety improvement, combined with a level of transparency unprecedented for an academic medical center. The arrival of Mark Zeidel as our Chief of Medicine set the stage for this, as his is the largest department, and because he has a rabid enthusiasm for the proposition that hospitals should not harm patients. I personally took his objective a step further, by publishing real-time clinical data on this blog, on the theory that transparency would help us hold ourselves accountable to the standard we say we want to meet. The incumbent Chiefs of Service and others recruited after Mark enthusiastically jumped in. With our Board's involvement, we adopted an audacious goal of eliminating preventable harm over a four year period, and we are on track to reach that goal.
Meanwhile, we decided that the only way to excel as an institution was to engage front-line staff in all job categories in a sustained and respectful program of process improvement. We tested this out with BIDMC SPIRIT and then moved to full-fledged implementation of the Lean process improvement philosophy.
Most recently, we "discovered" that patients and their families need to be part of the planning and management of the hospital. If our purpose is to deliver the kind of care we would want for members of our own family, incorporating the unique perspective of patients and their families is the only way we can achieve that purpose.
So, from the institutional perspective, that's why I have been here. It is engaging and worthwhile to be the coach and cheerleader for a fine organization like ours as we make progress in carrying out our mission. If you had come to me in 2002, 2005, or 2008, that's the answer I would have given. But I have gone through an evolution as to why I am here as a person.
My answer now is that I am here to be with people like Tom (below and also seen here with his friends.) Tom was very sick. When he recovered, he asked me to help as he devoted himself to helping other current and potential patients. I am also here to be with people like Mary, who feel comfortable enough with me to share very personal observations of things going wrong -- hoping that it will lead us to change practices, reduce pain, and save lives. I am also here, from time to time, to join patients who are dying and to have open and heart-warming conversations about things that really matter.
In short, I have learned to be here to be emotionally present as part of the human condition. There is no more dramatic place in the world than a hospital. There is pathos, humor, pain, and relief. I have allowed myself to be open to the possibility that the CEO can play a role that is totally separate from the business aspects of the hospital. People choose to invite me into their lives to a degree that is truly humbling. They offer me the blessing that my presence is helpful to them and others. I am ever grateful for that.
This is Tom DesFosses, who challenged all of us to organize a bike ride to support brain cancer research at BIDMC, some carried out by Dr. Eric Wong. This is the third year of A Reason to Ride, and it doubles in size every year. There were over 200 riders who raised close to $85,000, all of which goes to the cause thanks to many donations of supplies by Fuddruckers and others.
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As the fall soccer season arrived in New England, I was reminded of one of the pleasures of coaching youth players.
I recently had lunch with one of my alumnae from girls soccer, a young lady now aged 28. She said to me, "Do you remember that play I made in the tournament we went to in Connecticut?"
I responded, "Of course, you made a great save in front of the goal," a play I remember with great clarity.
"I don't remember that," she said, "I mean when I mistakenly headed the ball into our own goal and caused us to lose the game."
"I forgot that one," I replied.
"Well, I was devastated and was sitting on the grass after the game, sobbing my heart out. You came over and said, 'Don't worry, Tovah, great defenders sometimes score against themselves. Only the best defenders go out aggressively after every open ball. Every now and then, it deflects and goes into the net. You did a wonderful job.'
"I stopped crying, stood up, brushed myself off, and walked off smiling, saying to myself, "I'm a great defender!"
Here's a great story on WCVB-TV Channel 5 story about two cancer survivors who are helping to raise money for cancer research. It includes Tom DesFosses, whose Reason to Ride is this Sunday.
MITSS HOPE Award Nomination Deadline -- September 15, 2010
The deadline for sending in your nomination for the 2010 MITSS HOPE Award is fast approaching. Take the time to nominate an individual, organization, department, or group that is doing great work aligned with the MITSS mission of Supporting Healing and Restoring Hope to patients, families, and clinicians impacted by adverse medical events.
Along with the national and international recognition that this prestigious award affords, the winner will receive a $5,000 cash prize that has been provided by the award sponsor, rL Solutions.
Go here for award criteria, an online nomination form, award history, past winners, and more! Nominating someone is easy, and submissions are done entirely online. Remember, too, that self-nominations are acceptable. Contact Winnie Tobin at (617) 232-0090 if you have any questions.
ABOUT MITSS: Medically Induced Trauma Support Services (MITSS), Inc. is a non-profit 501(c)(3) organization headquartered in Chestnut Hill, MA, whose mission is "To Support Healing and Restore Hope" to patients, families, and clinicians whose lives have impacted by medical errors and adverse medical events.
Our community lost two lovely women in the past several days, Joan Cutler and Beatrice Bruce. They were both strong and interesting and delightful people, but I was mainly struck by the comments I heard about their attributes as mothers.
With permission, I include here the eulogy from Beatrice's daughter Jane about her mom. It is an eloquent expression of that point.
In the past couple of years I have found myself talking with many women about my mother. I inevitably ask them if they are close to their mother and an answer that I get a lot and don’t really understand is, “It’s complicated."
Complicated is the last word that I would use about my relationship with my mother. It is as simple as could be. It is pure love.
My mother was never overwhelmed with the desire to have children. She told me that she never felt that maternal urge. After a brief marriage at 21, she and my father met, and they married when she was 31. When years went by and no babies came, it didn’t bother her a bit. She enjoyed her life with my father.
She gave birth to Alice when she was 38, and as she was leaving the hospital she waved goodbye to the nurses and jokingly said, “See you next year!” Sure enough, she was back in the same place thirteen months later giving birth to me.
With all the great things that my mother was and with her many accomplishments, motherhood was the role she was born to play. She used to say, “I’m the fiercest tigress in the jungle when it comes to my children.” Which doesn’t mean she was likely to take my side in any disputes with “authority figures” such as my teachers. She almost always sided with the teachers, and I WAS usually up to no good. It was very tough to put one over on Mommy.
All phone conversations between my mother, father, Alice, and me have always ended with the words “I love you." When Danny and I first fell in love, we played the “I love you more” game that I think all new couples play -- and as a newlywed of 8 years, I’ll admit that we still play it on occasion. A couple of years ago I was ending a phone call with my mother and when she said, "I love you." I said, "I love you more." She said "MORE???" as if it was a word she didn’t recognize. Again she said it in the same questioning tone, "MORE???" Then after a couple of seconds she said, “Don’t you know? There is no MORE."
A few years back we were talking about friendships and “best friends," and she said “I grew my own best friends." She wasn’t trying to be clever, she was just stating fact. And she will be my best friend forever. I love you Mommy.
A timely note from my colleague, Dr. Izzeldin Abuelaish MD, MPH at the Global Health Division - Dala Lana School of Public Health, University of Toronto:
This week we as Jews and Muslims celebrate holy holidays that come together at the same time.
Rosh Hashanah and Ramadan Feast help us focus on our commonalities and give hope that wisdom prevails and we have all days as holidays: Days of happiness, joy, prosperity and peace for all.
(I am off duty for the holiday. Will moderate your comments tomorrow night.)
Leaders Never Stop Learning: A Conversation with IHI’s President and CEO, Maureen Bisognano Thursday, September 9, 2010, 11:00 AM – 12:00 PM Eastern Time
What’s it like to spend an hour with Maureen Bisognano? Well, for one thing, it’s nothing like reading the daily news about health care, some of which might have you throwing your hands up in utter despair. Maureen gets up early to make sure she’s read and heard the latest, but she’s also an early riser because there’s so much to do! Every barrier is an opportunity and, if you’re not quite convinced, Maureen loves to share the evidence. Maureen is also fond of saying, “Don’t worry alone!” There are strong models to learn from, not just in the US but internationally. And the community of experts willing to describe how they achieved their successes is often just a phone call, or an email, or an actual visit away. Maureen does a lot of traveling to learn things first hand, and that’s one reason she’s convinced there’s an unshakable drive out there to improve care.
Indeed, there’s probably never been a more crucial moment to take things to the next stage. How are we going to redesign and transform the health care system with patients rather than for them? How can health care improvement leaders seize the opportunity of health care reform and help shape an agenda that truly integrates lowering costs, improving quality, and improving health?
These are just some of the things on Maureen’s mind as she takes hold of the baton that she and Don Berwick more often than not traded back and forth to determine the best ways to help health care professionals deliver better, safer care. Please join WIHI host Madge Kaplan for a lively, honest, and optimistic discussion with Maureen about what’s in store for health care, what’s on the agenda at IHI, and what ideas and tools you need to seize the moment.
Insurers have increasingly used pay-for-performance measure incentives for hospitals. Is there a sense that these will continue to expand?
I am not sure of the answer, but the question prompted me to give you a sense of the current P4P measures used by several of our private and government payers.
Here's a partial list:
Heart failure care processes (CMS measures) AMI care processes (CMS measures) Pneumonia care processes (CMS measures) Surgical care infection prevention (CMS measures) Patient experience with MD communication (H-CAHPS measures) Patient experience with RN communication (H-CAHPS measures) Patient experience with responsiveness of staff (H-CAHPS measures) Patient experience with discharge planning and instruction (H-CAHPS measures) Reducing surgical site infection -- colorectal population Reducing surgical site infections -- GYN/hysterectomy population Reducing surgical site infections -- orthopaedic trauma population Reducing nosicomial catheter related urinary tract infections Deploying rapid response teams (Triggers Program) Preventing central line-associated bloodstream infections Preventing ventilator associated pneumonia Preventing pressure ulcers Reducing MRSA infections Preventing harm from high-alert medications Preventing adverse drug events Reducing surgical complications Board of Directors training on quality and safety Assessment of culturally/linguistically appropriate services Assessment of health disparities
If you were in a management position and were trying to direct quality and safety improvement efforts, how would these guide your behavior? If your were a nurse or doctor and were trying to be responsive in focusing on quality and safety improvements, what would this variety of measures tell you?
Let me jump to the answers: The large number of overlapping measures, often with different definitions among payers, can cause confusion rather than offer guidance to hospitals in directing improvement efforts. That is especially the case because many of the items are "roll-ups" of several metrics in themselves.
In this respect, P4P measures are not always the most useful management tools by which to focus attention on the fundamental elements of process improvement: reduction in variation, redesign of work, and communication in clinical settings -- all in collaboration with patients and families. People who have studied how to achieve change in organizations point to the need for an overarching, audacious set of goals that are highly motivational.
In our case, the most important established goal is to eliminate preventable harm, one endorsed by our Board of Directors. This goal is combined with a strong commitment to transparency, so we hold ourselves accountable to the standard we have set. So, while we will always do our best to meet P4P requirements, many of which have clinical importance, we do so within an overall context that is meant to transform the organization.
I went up to one of the floors of our hospital one night this past weekend to visit a patient. As I walked past the nurses' station, one of the nurses recognized me and jokingly called out to her colleagues and the interns, "Look who's here! Do everything right!"
We all had a good laugh.
The serious one is offered by IHI's Jim Conway on the post below, "Our systems are too complex to expect merely extraordinary people to perform perfectly 100% of the time. We as leaders must put in place systems that support great practice by people who suffer from being human and will make mistakes.” Health care takes great people AND great systems. No matter how good you are as a healthcare professional you will make mistakes. We must have systems that catch your “humanness” before it gets to patients and causes harm.
There is a great debate set forth in the IHI's Open School discussion of the wrong-side surgery case that occurred at our hospital a few years ago. (I have written about this below, but there are some new postings.)
Kimberlee Ziga writes: I, as an RN working in an ICU, have also made mistakes. Thank God they have not been life threatening but nonetheless, they were mistakes. I was educated thoroughly and proven to be competent with testing. When I made that mistake, I was written up. I totally understood why. I am a licensed professional who is competent at her job, and that calls for accountability and responsibility. I believe all the medical staff involved should have been held accountable and disciplined accordingly. If that was my family member, I would have been irate for what they had to go through.
In contrast, Jessie Moon says: Paul Levy . . . made it out like it was a serious situation, but one that could happen to any surgery team. He* did not punish any one person, but instead he took care of the situation by asking, "how can we lower the chances of this ever happening again", which makes the person and the family that this happened to feel better (or so I would assume), the public, as well as the workers in this hospital.
There are two parts to this question. What is the most effective way to reduce the likelihood of a similar event happening in the future? I have addressed this topic fully below. At heart, the answer goes to the definition of the "just culture" that has been adopted by a hospital. But let's talk about the second one: What makes the patient and family feel better in a situation like this? The literature on the topic of disclosure and apology suggests that patients and families are not interested in having the doctor or nurse be punished when a medical error occurs, if (and this is an important if), the clinician makes clear that he or she is clearly regretful about the error, is empathetic with the patient, and if the clinician and hospital show that they plan to learn from the error to help avoid repeats with other patients.
We can speculate on why this is the case. I heard IHI's Jim Conway discuss this once, and I think he had it right. Jim said that patients want to trust their doctors and nurses. That trust is enhanced when a clinician makes a clear and honest admission of an error and shows that s/he cares about the additional pain and suffering imposed on the patient.
However, the patient also wants to know that something has been learned from the experience. S/he wants an assurance that his or her pain is not in vain, that other patients will be less likely to suffer similar harm. This tendency comes from the inherent goodness in most people. We do not mind making personal sacrifices if other people are helped and a greater good emerges.
But, an additional step adds even greater value. As noted by Tom Delbanco and Sigall Bell:
Perhaps most important, building bridges to injured patients necessitates including them and other patients in the development of solutions. Patients and families will bring ideas to the table that expand the horizons of health care professionals. The yield from working in partnership could be enormous, both improving people's experience with medical error and preventing harm from occurring in the future. --- * A slight correction for Jessie: The decision about punishing a member of the medical staff for clinical errors generally lies with the Chief of Service and with the hospital's Medical Executive Committee, not with the CEO. But I certainly concurred in this case.
I was on an airplane recently and came across this signage in the rest room. Of course, most of us would recognize that it signals the existence of a fold-down table for changing babies.
But I had one of those moments where I looked at the components of the pictogram and wondered why it worked. There are two detached circles. There is a wide horizontal line. There is a squiggle that looks like a broad "u" with a serif on its top left. And then there is this odd assortment of combined shapes: A vertical post, a trapezoid attached at an angle to a rectangle, a short vertical post, and another post at an angle.
How do we know this odd assortment is a woman? Would this be understood in a culture where women only wear floor length dresses?
Likewise, how do we know the squiggle and the circle are a baby?
How do the detached circles persuade us that they are part of people? Why don't we think both people have been decapitated?
I am hoping there are people out there who can explain why this works, both visually and culturally. Please comment.
Two former teammates confer before Saturday night's Red Sox versus White Sox game in Fenway Park. Meanwhile, some young fans who have loyally followed Manny through his peregrinations show off shirts from the blue (i.e., Dodgers) period.
Regular readers have noticed that my weekend postings offer stray far and wide from hospital and medical matters. For those who enjoy this, I am pleased.
Today's is in that category. My wife and I are fortunate to have two talented daughters, who have managed to teach us lots of things. This weekend, I got a lesson in choreography from Rebecca.
If you are like me, you enjoy dance concerts but don't really have much of an idea of what is going on it. You watch and see wonderful and creative movement and patterns on the stage and mainly wonder how those (mostly young) people can physically do what they do. But there is another participant, the choreographer, who puts together elements of space, time, energy, and form.
Rebecca now teaches this art to others, and one exercise she does to get across the concept of using the space on the stage is to assign the students to design a dance solely with walking, running, and standing still. In others words, no acrobatic movements, lifts, or the like are permitted. Students are often flummoxed by this at first, but then they get the concept.
The ultimate example of such a dance is Paul Taylor's Esplanade. He created the dance through movement pathways -- form and spatial direction -- without the traditional phrasing you have come to expect in a performance. I include the video here.
Tom DesFosses is a grateful cancer survivor who has organized a biking event to raise funds for cancer research. It will be held on September 12, in Danvers, MA. See here for scenes from last year's ride.
Negotiation advisor, author, speaker; former hospital CEO, regional water and wastewater system CEO, and public utilities regulator. But above all, coach.
Is there something they teach in hotel school that suggests that having unusual water in conference rooms is good for business?
